Morgan Stanley fined by NYSE

Firm failed in record keeping, gave improper orders to floor brokers

DavidWeidner

NEW YORK (MarketWatch) - Morgan Stanley and Brown Brothers Harriman were among seven firms fined by the New York Stock Exchange's regulatory arm in November, the Big Board said Wednesday.

Morgan Stanley
MS, +1.08%
was fined $200,000 for improper order handling by NYSE Regulation Inc. An NYSE hearing panel determined that between October 2000 and November 2002, Morgan Stanley used a third-party floor broker so it could hold positions on both sides of the market, a violation of exchange rules.

Morgan Stanley also failed to record its instructions to floor brokers and comply with "know your customer" rules, the NYSE said.

The NYSE also said it fined Brown Brothers Harriman & Co. $170,000 for employing barred individuals and failing to report them.

An NYSE hearing panel found that between August 1998 and August 2005 the private bank failed to detect that some of its employees were subject to statutory disqualification and failed to promptly report the individuals once it became aware of the violations, the NYSE said.

In other actions, the NYSE fined:

Harborview LLC, $200,000 for lax internal control over its electronic order handling and odd-lot trading activity.

National Financial Services LLC, $125,000 for, among other violations, failing to obtain margin securities in some customer accounts in February and March 2004.

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